@article{Rochin:279104,
      recid = {279104},
      author = {Rochin, Refugio I.},
      title = {Farm Credit and the Response of Reform Beneficiaries: The  Case of Agrarian Reform in El Salvador},
      address = {1983-08},
      number = {2139-2018-7093},
      pages = {22},
      year = {1983},
      abstract = {El Salvador's agrarian reform cooperatives, which were  created in March 1980, have received substantial credit  through the Revolutionary Junta Government's nationalized  banking system and its Institute for Agrarian  Transformation (ISTA). Some 43 million was extended on an  "emergency" basis in the first months of the reform in  1980, and it is still unclear what some of the money was  used for. Much of it is still unpaid and accumulating  penalty interest each year it is refinanced. Some 251 Phase  I cooperatives currently receive production credit from  banks; the Banco de Fomento Agropecuario (BFA) serves the  largest number and is the bank responsible for lending to  cooperatives that have severe problems. In general, the  commercial banks lend to cooperatives that farm land whose  former owner dealt with those banks, and they report  generally good repayment by these cooperatives. Overall,  about 76 percent of the production loans made to Phase I  cooperatives in 1980 and 1981 were repaid, which is better  than the record of other Latin American land reforms and  also better than the repayment record of non-reform private  landowner borrowers in El Salvador. As world interest rates  have fallen, these production loans do not appear  subsidized, at interest rates around 13 percent. An  important link in the loan collection process is the  marketing agency, and cooperatives generally sell export  crops and basic grains to government marketing  intermediaries. The loan repayment is deducted  automatically in these cases. However, coffee growers  (reform and others alike) are quite unhappy that the coffee  marketing institute (INCAFE) makes them wait for payment  for more than a year after they harvest the coffee.  Detailed studies of the ability of a sample of Phase I  cooperatives to pay their debts, including the land debt  which they owe (like a mortgage), indicate that many  cooperatives can make a profit on current production. They  often have problems covering the interest, let alone  prinicpal, of the 1980 "emergency" initial loans. On the  other hand, several cooperatives cannot realistically  expect to cover principal and 7.5 percent annual interest  on the value of the land established by ISTA when it  compensated the ex-owner. In some cases, it appears that  land values declared by owners in 1976 and 1977 were  greater than the true value of the land for production  purposes. But further study is needed in this area.  Management appears to be a limiting factor in the ability  of Phase I cooperatives to earn profits in the future.},
      url = {http://ageconsearch.umn.edu/record/279104},
      doi = {https://doi.org/10.22004/ag.econ.279104},
}